The Manchurian Bailout

FT: China ploughs cash into struggling north-east

China will plough Rmb1.6tn into projects in its north-eastern rust belt in an effort to revive growth in one of the country’s worst-performing regions, one of the clearest signs to date that Beijing is attempting to stimulate its way out of slowing economic growth.

In the first quarter of this year the north-east, home to the state-backed heavy industrial companies and state-owned farms that form the Communist party’s traditional support base, reported some of the slowest growth rates in China. One province, Liaoning, reported negative growth — the first provincial contraction in seven years.

Earlier this week: Why Did Private Investment Collapse? Private Investors Fled Public Projects

The government has to spend more to prop up the economy as private investors flee.